Britain's chances of slipping into recession have receded but the economy still faces threats from sluggish consumer spending, the eurozone crisis and high oil prices, the Office for Budget Responsibility has warned.

Publishing their economic outlook alongside George Osborne's budget, the independent forecasters said growth would be slightly stronger than first feared this year but it painted a picture of a slow road to recovery and slashed forecasts for business investment.

"The underlying picture is one in which growth is pretty stable through to the autumn and then picks up towards the end of the year," he added, but warned potential output would not be back to its long-term average growth rate until 2014.

Despite the new year uptick in activity, the OBR would not go so far as to rule out a technical recession, defined by two consecutive quarters of contraction. The UK economy shrank in the final months of 2011.

It put the chances that the UK economy would shrink this year versus 2011 at "roughly" one-in-four.

It said the "key risks" stemmed from the sovereign debt crisis in the eurozone and from a further spike in oil prices, which have already hit $127 a barrel this year.

Within the UK, the forecasters warned consumer spending would continue to act as a drag on overall growth and that pressure would not lift until income growth significantly outstrips the pace of inflation in 2014.

One of the biggest uncertainties in its growth outlook came from business investment, which the government has been banking on as a key driver in the recovery.

After a dismal outturn at the end of last year, business investment growth was slashed to just 0.7% this year from 7.7% predicted back in November. "We believe that non-financial companies' balance sheets may be weaker than official statistics suggest," the OBR said.

"Continued uncertainty, combined with funding problems in the banking sector, are likely to result in a sharp fall in business investment and a negative contribution from inventory accumulation this year, keeping the economy broadly flat," it said.

The outlook for unemployment remained bleak with the OBR forecasting the jobless rate would peak at 8.7% this year and edge down only slightly next year to 8.6%.

The OBR's latest forecasts for the economy, which it sees growing 2% next year, are slightly more optimistic than those of other forecasters but a little more pessimistic than the latest outlook from the Bank of England.

Economists said it was unsurprising the OBR had held off making any big upward revisions to the outlook despite a pick-up in the tone of economic indicators and business surveys in recent weeks.

Philip Shaw at Investec commented: "Has the economic environment not improved since last autumn? At first glance the absence of an upgrade to the macro forecasts might seem inconsistent with the better tone to financial markets so far this year. Arguably though what has changed is that the downside risks facing the world economy have faded, without an appreciable change in the main case outlook."